Verizon Wireless is to acquire Alltel Corp. in a cash merger, the company announced in a press release today. The talks between the two wireless carriers that were announced yesterday by Reuters, CNBC and other news agencies seem to have gone smoothly.
According to the deal, Verizon will buy Alltel for $5.9 billion cash, as well as assume their $22.2 billion long-term debt (meaning Alltel’s debt becomes debt of Verizon Wireless now) so the total value of the deal is $28.1 billion.
The networks of the two wireless carriers are the second and the fifth in terms of number of customers in US, with 67.2 million and 13.2 million users respectably. When Verizon Wireless acquires Alltel as planned, the company will reach 80 million mark and top AT&T with their 71 million users, becoming the owner of nation’s biggest wireless telecommunications network. The date of completion of the merger will likely depend on approvals from antitrust authorities, but the parties are expecting it to happen by the end of the year.
The current owners of Alltel, private equity firms TPG Capital and GS Capital Partners bought the corporation for about $28.4 billion on November 16 last year (source). It will be interesting to note that Verizon isn’t paying any more than TPG and Goldman did, especially having in mind that Alltel increased it’s EBITDA (earnings before interest, taxes, depreciation and amortization) by 10% since that acquisition.
Alltel primarily specializes in rural markets which Verizon Wireless doesn’t serve; after the merger, the company plans to upgrade those networks with 4th generation LTE (Long Term Evolution) technology over the course of several years. Good news for Alltel customers it seems, now that it is owned by a strong company with plenty of funds for investment in their network.
“This move will create an enhanced platform of network coverage, spectrum and customer care to better serve the growing needs of both Alltel and Verizon Wireless customers for reliable basic and advanced broadband wireless services” said Lowell McAdam, the CEO of Verizon Wireless.
Via: Verizon Wireless
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